Public Bill Committee

[Sir Roger Gale in the Chair]
Written evidence to be reported to the House
CA 13 Hacan Clearskies (Heathrow), Gatwick Area Conservation Campaign and Stop Stansted Expansion

Clause 1  - CAA’s general duty

Jim Fitzpatrick: I beg to move amendment 8, in clause1,page1,line8,leave out from ‘interests of’ to ‘regarding’ and insert—
‘air passengers and shippers of cargo both present and future’.

Roger Gale: With this it will be convenient to discuss the following:
Amendment 13, in clause1,page2,line14,at end insert—
‘(ea) the need to balance the interests of current and future air transport users,’.
Amendment 15, in clause2,page2,line33,leave out from ‘interests of’ to ‘regarding’ and insert—
‘air passengers and shippers of cargo both present and future’.

Jim Fitzpatrick: Good morning, Sir Roger. It is a pleasure to see you presiding over the Committee today; I look forward to serving under your chairmanship and that of Mrs Riordan.
Before I speak to the group of amendments, I would like to repeat the comment that we made last week: we welcome the Bill. You asked, Sir Roger, whether there was consensus and we reassured you that there was. That will be demonstrated during the next few weeks. It was a good Bill when we drafted it—I say “we”, but of course the experts drafted it and we helped—and it is still a good Bill, although we hope to improve it.
Clause 1 is very much the key clause, because it sets out the framework of the Civil Aviation Authority’s duties for the rest of the Bill. The next three sets of amendments deal with specifics relating to the duties that we would like incorporated, and in some cases reinstated, into the Bill. Amendments 8, 13 and 15 are a gentle, probing start to our detailed deliberations. They were tabled as a result of the Transport Committee’s report, published on 19 January—especially paragraphs 28 to 31 on pages 13 and 14—and address the Committee’s concern about the definition of “air transport users”.
We would like the Minister to explain why the Government omitted the definition that they used in the draft Civil Aviation Bill, which gave the aviation industry greater clarity. Will she also explain how the Bill will prevent current passengers from being unreasonably disrupted due to works to improve services for future users? Paragraph 28 of the report says:
“In its policy paper, the Government defines the consumer as ‘passengers and owners of cargo both present and future’ but this definition is omitted from the draft bill. We heard concerns that the draft bill does not clearly define who constitutes an air transport user. The Airport Operators Association, for example, said that a clearer definition was needed in the legislation, to avoid confusion and disagreement in the future.”
The Committee recommended
“greater clarity in the wording of the bill’s definition of users of air transport services”
and suggested that
“users be defined as ‘passengers and shippers of cargo both present and future’. There should also be more specificity in the CAA guidance regarding the relative weight that should be put on current versus future air transport users’ interests.”
The Committee further recommended
“that the special position of airlines be recognised by way of a secondary duty”.
We will come to that duty shortly.
The amendments are relatively straightforward in that the Government originally proposed the definition, which seemed to provide clarity and was supported by at least some sectors of the industry and the Transport Committee. I look forward to the Minister explaining what changed and why. Given a satisfactory explanation, we would seek leave to withdraw the amendment.

Roger Gale: Before we continue, I should say that I am aware that there are Members on both sides who have not served on a Standing Committee before. The process is a little arcane, but I hope that you will get to grips with it fairly quickly. If there are problems, please let me know.
Basically, amendments are assembled in order of subject of debate, and you may find amendments that refer to later parts of the Bill grouped with the lead amendment being debated now; if those amendments were to be moved, they would be moved later. I apologise; I should have said that at the start of the Committee. I hope that that is clear.
At the end of each clause debate, there is a stand part debate, which is literally, “That the clause stand part”—remain part—“of the Bill”. I am very relaxed about that, but other Chairmen may take a different view. You can have only one stand part debate on a clause, but if it is a complex clause or an umbrella clause, sometimes it is convenient to have a broad debate at the start with the first group of amendments. I am perfectly prepared to allow that, on the strict understanding that if we do have a broad-ranging debate now, you do not get a stand part debate at the end of the clause after the debates on all the other amendments. I hope that that is clear. If there are any problems, do not hesitate to ask the Clerk or the Chair and we will try to explain.

Tom Harris: On a point of order, Sir Roger. Given that advice, would you be happy to inform the Committee in advance that there will not be a stand part debate, if there is a general debate on a clause at the beginning?

Roger Gale: That I cannot do, because it is up to you. It is in your hands. If I do not judge that the debate at the start of any particular clause is very broad-ranging—that is fine—I will let you know later that there will not be a stand part debate.

Jim Fitzpatrick: On a point of order, Chairman. I am grateful for that clarification, which I am sure the Committee finds helpful. With regard to clause 1, however, we would welcome a stand part debate after we have gone through the amendments, because that will colour our judgment on the stand part decision when it comes. In that instance, it would be helpful if we could have that debate afterwards, once we have gone through the amendments.

Roger Gale: That is fine, clear and helpful to me as it will be to Linda Riordan when she is in the Chair. It means that we will confine the debates on amendments strictly to the amendments, on the understanding that the Committee wants a stand part debate at the end. I hope that is clear.

Theresa Villiers: Thank you, Sir Roger; that guidance is useful. There will be an inevitable degree of overlap between the debates on the amendments, because they cover some of the same issues. I will try to avoid too much duplication but, for the sake of clarity, it might be necessary to have some overlap between my remarks on this group and on the next two.
I thank the shadow Minister for setting out the reasons behind the amendments and for his overall support for the general approach taken in much of the Bill. As I said in my evidence to the Committee, that is very welcome. I also note and appreciate that the amendments we are considering reflect some of the recommendations of the Transport Committee report published in January. That, obviously, is a good reason for this Committee to give them proper consideration and debate.
I turn to amendment 8 and the change in definition across various iterations of the Bill, with particular regard to “future users”. The Bill seeks to provide the Civil Aviation Authority with a clear primary duty with regard to its airport economic regulation functions—namely, to further the interests of end users of air transport services in relation to airport operational services. The change to adopt this primary duty is at the heart of our proposed reforms to deliver our goal to ensure that airport economic regulation has the interests of the passenger as the driving force behind the decisions made. Many across the industry have supported that change, as was clear from the evidence that we heard. No doubt, in relation to the consideration of an airline-focused duty, we will have more opportunity to focus on this matter.
I agree with both the Transport Committee and Opposition Front Benchers that it is important that the interests of future users of airport services are protected, whether passengers or the owners of cargo. That is an important issue for the Bill to cover. However, I do not feel that I need to support amendment 8, because the Bill already makes clear that the Civil Aviation Authority, in considering the interests of passengers and the owners of cargo, must have regard not just to present users but to future users as well. That is in clause 69.
I am not convinced that moving broadly similar wording from clause 69 to clause 1 is necessary to clarify the Bill. We are clear that under the regime proposed in the Bill the CAA will be obliged to consider the interests of both present and future users.

Nicholas Dakin: If the Minister is not concerned about the definition, why not put it in to gain further clarity and be in line with the Transport Committee’s recommendation?

Theresa Villiers: I understand the hon. Gentleman’s point, but we have a definition that works in clause 69. I cannot see the merit of transferring that reference to future users to clause 1. We need a good reason to change the Bill, and the Transport Committee’s concerns about future users are dealt with by clause 69. It may be in a different part of the Bill than was the case previously, but it is still present and is still important, and, as I will come on to shortly, it is important that the CAA makes sensible decisions when balancing the interests of different groups of users—present or future, leisure or business.

Jim Fitzpatrick: The Minister mentioned that she was seeking clarity here, to demonstrate that the primary focus is on passengers. Our amendment 9, which we will consider next, raises the question of a secondary duty for airlines. I would not want that point to be lost by our not making it now. I would not want the Minister to think that in omitting that point—which we want to make, strongly—we were accepting an inability to make it.

Theresa Villiers: As I acknowledged at the start of my remarks, there will inevitably be some degree of overlap in the exchanges between the Front-Bench teams on this group of amendments and the next, particularly on the definition of end users. I appreciate that amendment 8 not only concerns future users, but seeks to change the definition of freight end users from the owners of cargo to the shippers of cargo. This may be a convenient moment to move on to that aspect of the amendment, which raises issues similar to those that the hon. Gentleman will be raising about airlines in the next group of amendments.
As with all aspects of the Bill, careful consideration was given to the appropriate definition of freight users. It is a relatively simple task to define a passenger, but it is more difficult to ensure that we get the right definition of freight users. The Government concluded that a reference to the owners of freight was the best practical way to define the group whose interests the regulatory system should aim to protect.
It is important that the economic regulatory framework that we agree on delivers not only for the passenger, but for freight users. The conclusion was that the owner of the cargo—as opposed to the shipper, who is actually an intermediary—is the end user. Freight shippers are broadly akin to the passenger airline rather than the passenger and so, in line with what we have sought to do on the passenger side of the equation, that is why we are focusing on the owners of cargo.
Whether to focus regulation on end users or intermediaries was the subject of extensive consideration—for example, in the Competition Commission’s investigation into BAA. It was also carefully considered by Professor Martin Cave in his review of economic regulation—established, I think, when the hon. Member for Poplar and Limehouse was the Minister with responsibility for aviation—and by the previous Government’s 2009 consultation, “Reforming the Framework for the Economic Regulation of Airports”. After all that consultation, the conclusion was that a focus on end users was the most effective way to establish a new regulatory system and that the primary duty should be to further the interests of the end user rather than the intermediary, which is also consistent with the Government’s principles of economic regulation. That is why we focused on the owners of cargo rather than the intermediaries—the shippers.
However, that does not mean that the interests of intermediaries, whether in the context of shippers of cargo or airlines, will be disregarded. As the CAA said in its evidence, the intermediaries will be an appropriate proxy for the end users in many cases, so they will have an important role in the regulatory system and proper consideration will be given to their views. However, moving away from an emphasis on end users being the subject of the primary duty would undermine the clarity that we are seeking for the regime, which is why I feel unable to support the hon. Gentleman’s change in definition.

Mark Reckless: The Minister refers to the end user of freight, but the Bill refers to the owner. Often, when freight is in transit, it will have been exported and sold on. Whether that is on a “cost, insurance and freight” basis or a “free on board” basis will determine whether the owner in transit is the seller-exporter or the buyer-importer. Will the Minister clarify that she is talking about ownership, rather than the end user?

Theresa Villiers: We have selected ownership as a means to describe the end user. Ownership is a good indicator or descriptor of the end user, regardless of the transition of ownership during transportation. As I said, we looked at different options, but we concluded that the simplest and clearest definition is that the ultimate end user is the owner of cargo. As my hon. Friend says, in some cases that will be people in the UK and in some cases it will be people outside the UK, but in both instances it makes sense for a system designed to replicate a competitive and functional market to consider the interests of cargo owners.

Mark Reckless: To clarify further, when an exporter sells goods to a UK importer and the ownership transfers only on arrival, with the buyer taking delivery in the UK, will the end user, or the owner in the Bill, be, for that purpose, the exporter of the goods?

Theresa Villiers: What I am saying is that the class of end users, which is defined by ownership, is capable of covering ownership under a range of transactions. I do not think that will cause such a problem that the CAA will need to focus on the technical transfer of ownership. Whether it is the person receiving the shipment or the person sending the shipment, the interests of end users, where they have an ownership interest, are protected by the Bill.

Nigel Mills: Does the Minister agree that the amendment would create an interesting situation for airports, such as East Midlands airport, that have a substantial freight business? There would not be a primary duty to airlines that fly passengers, but there would be a primary duty to the large number of freight airlines, which have a large volume of flights. That would be a distorted position for airports to manage. An airport would probably have to give far more regard to its freight airlines than to its passenger airlines.

Theresa Villiers: I am concerned that the amendment seeks to switch the Bill’s focus away from end users. The issues are more obvious for passengers, which we will come on to, but they are broadly the same for freight customers. In many cases, the interests of the shipper or the intermediary may be the same as the interests of their customers, the ultimate end users. However, it is important, where the interests of the end user and the intermediary or shipper conflict, that the regulator gives priority and primacy to the interests of the end user.
Where there is conflict between the interests of airlines and passengers, for example, I hope all members of the Committee would agree that it is important to give primacy to the interests of the passengers, which should be the goal of this new regulatory regime. Like giving airlines a supplementary duty, making shippers of cargo, rather than their customers, the focus of the regulatory regime would undermine the strong consumer focus we are trying to give to the new regulatory regime.

Gavin Shuker: I would like to give the Minister the chance to correct the record, in case she misspoke. She said that the primary duty should be to passengers. I am unclear about that, because I thought the amendments we are discussing seek to balance the needs of all users of air transport services.

Theresa Villiers: I certainly did not mean to say that the interests of freight end users are subordinate to those of passengers. There is a primary duty to focus on all end users, including both passengers and the owners of cargo. I am grateful to the hon. Gentleman for preventing me from wandering too far off the subject and pre-empting the discussion that we are about to have on airlines and their passengers, and their place in the regulatory regime.
Although I take this issue seriously, because it was raised in the Transport Committee report and an amendment has been tabled on the subject, we must focus on the customers of the intermediary, whether they are cargo owners or passengers. I hope therefore that the shadow Minister will consider withdrawing the amendment.
Amendment 13 addresses cases in which the interests of different groups of users might conflict. We firmly believe that a common-sense interpretation of the primary duty in clause 1 is that the CAA must pay appropriate regard to those interests. I accept that there will be occasions when such interests conflict. The example most often referred to is that the interests of present passengers may not be served directly by investment in facilities that future passengers are likely to enjoy or want, as the shadow Minister mentioned. It is also possible that budget airline service passengers may not want the same kind of facilities as full service airline passengers.
Such conflicts could clearly arise under the proposed new regime. However, in acknowledgement of that, subsection (5) empowers the CAA to determine how best to fulfil its primary duty to end users, were such conflicts to happen. It is important that the Bill addresses that issue, and I am confident that the flexibility we have given to the CAA will enable it to do the kind of balancing exercise called for by amendment 13. It gives discretion to the regulator in determining how to deal with such conflicts, and I believe that the regulator has the capacity to deal with them, and can achieve the appropriate balance between the groups.
The advantages of giving flexibility to regulators in deciding how to manage conflicts of interest between different groups include the prevention of regulatory deadlock, which has been a problem in other spheres, and the ability to balance conflicting interests between different groups. That is important in the airports sector; as we have already hinted, freight customers and passengers may have different needs, as may present and future passengers, or the passengers of different sorts of airlines. The Bill deals with those issues, and in this context, as in many others, giving the regulator discretion is the best and most flexible way to enable the independent, expert regulator to get the right outcome for passengers and freight end users.
I hope that I have provided reassurance for the Opposition Front-Bench team. Valuable as the discussion has been, I do not feel able to ask my colleagues to support the amendment, so I hope that the Opposition will consider withdrawing it.

Jim Fitzpatrick: Given the Minister’s comments and particularly her reference to clause 69, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jim Fitzpatrick: I beg to move amendment 9, in clause1,page1,line10,at end insert—
‘(1A) The CAA must carry out its functions, where appropriate, in a manner which it considers will further the interests of air transport service providers.’.
This was intended to be another probing amendment that followed up concerns raised by the airlines about being excluded from the definition of air transport users. However, after last week’s evidence sessions some doubt has arisen, which I hope the Minister can address after I explain the concerns.
We agree that it is right that the primary duty focuses on the passenger, but we feel that the Minister needs to explain how the CAA will give airlines more recognition than appears in the Bill at present. Paragraph 29 of the pre-legislative scrutiny report, published in January by the Transport Committee, refers to the different views of airports and airlines on the issue:
“Manchester Airports Group was particularly concerned that the bill or explanatory material should make clear that airlines were excluded from the definition of users of air transport services. The airlines, however, took the opposite view, pointing out that, although not the end users of air transport services for which they are often the providers, airlines are the primary customers of the airports. Dr Barry Humphreys of the British Air Transport Association told us: We would like to see the role of the airlines more formally recognised in the duties given to the CAA…There needs to be a legal basis for taking account of the views of what, after all, are the principal customers of the airports.”
Dr Humphreys reiterated that view when he appeared before the Committee, saying:
“First, we believe that the CAA should have a primary duty to look after the interests not only of the passenger, but of the airlines, in relation to airport regulation. We have pursued that argument at great length—and I think we have probably lost it.”
It is clear from the Government’s line that they have lost it.
“Nevertheless, that is our preferred option.
The reason why airlines are so central to airport regulation is that they are the prime customers of airports. I understand that the passenger, of course, is a customer as well, but we are dealing here with airport regulation. This is a five-year cycle that is extremely complex, very time-consuming and very expensive. It is a process that individual passengers, with the best will in the world, are just not able to participate in. Indeed, even passenger representative groups have told us repeatedly that it is not something they either want or are able to participate in. It deals with matters such as the cost of capital, baggage systems, investment in terminals and capacity. These are technical, complex issues that realistically only the airlines and the airports are in a position to deal with. We think it extremely important that the CAA take notice of the key role the airlines play.
The Department for Transport argues that there are numerous places in the Bill where the CAA is required to consult the airlines. We welcome that and have no doubt at all that it will consult us, but in our opinion being consulted and there being a duty to take account of your views are two quite different things. We believe that having at least a secondary duty for the CAA to take account of our interests would improve the quality of the CAA’s decision making, to the benefit of the ultimate consumer.”––[Official Report, Civil Aviation Public Bill Committee, 23 February 2012; c. 67-68, Q131.]
Mr Haines from the CAA made it clear that his organisation believed there already was protection in the draft Bill for airlines but the airlines are not convinced. It would be helpful if the Minister could reiterate the Department’s view on this. Mr Haines was robust in his rebuttal of the suggestion of a secondary duty for airlines. In his evidence he gave four reasons why there should not be such a duty. He was very persuasive when he said:
“First, we think such a duty is wholly unnecessary. There are about a dozen places in the Bill that require us to consult airlines…Secondly, we think such a duty might cause confusion…Thirdly, there is a risk of confusion…Fourthly, such a duty would be quite a significant step away from successive Governments’ policy.”––[Official Report, Civil Aviation Public Bill Committee, 23 February 2012; c. 39, Q67.]
He then went on to compare the situation with other regulators.
I received a response yesterday from British Airways that casts another light on the CAA’s view. In response to the comment that a duty to airlines is unnecessary as the Bill requires the CAA to consult airlines on many issues, BA said: “The right to be consulted is wholly different from a clear requirement on the CAA to have regard to the reasonable interests of airlines. It is well recognised, including currently by the CAA, that the interests of airlines and passengers are very well aligned. The key issue is how the CAA will work out what the passenger interest is. The CAA and all other parties agree that airlines are generally best placed to represent the view of their passengers. Enshrining this agreed position in a secondary duty ensures that the CAA must follow this agreed approach in so far as it is consistent with the primary duty. If they do not the alternative is to follow a survey-based approach which would be costly and ineffective.”

Julian Huppert: As I understand it, the hon. Gentleman was arguing that airlines are the best people to represent their customers. Does he accept that airlines often do not treat their customers as best they could? Does he agree that there is a large discrepancy between what customers want and what the airlines want, and that the airlines do not speak up for customers in far too many cases?

Jim Fitzpatrick: I take the hon. Gentleman’s point that every business in the country has disgruntled customers and that airlines, like any other business, sometimes let down their consumers. We do not want to create a conflict between the consumer or the passenger and the airlines—the users of airport services—but we want to create a secondary duty to recognise that airlines are also customers of airports, so their views ought to be taken into account. The CAA recognises that. The question is how significant the airline’s views should be. Our line is that it should be a secondary duty, so the passenger is the primary responsibility but airlines should also be consulted. When it comes to the complex questions of airport regulation, which I will address, what passenger will be equipped to deal with those? The airlines, on behalf of their passengers—on behalf of their customers—could play an effective role.
 Dr Huppert  rose—

Jim Fitzpatrick: If the hon. Gentleman will allow me, I will come on to that point.
As I was saying: “Where an operator or regulator may gather survey data on the desirability of a new terminal building or other investment project, airlines will be in a better place than passengers to thoroughly consider the implications on all passengers of the costs of such projects, as reflected in ticket prices. Airlines are better placed to negotiate with airport operators for a balance of service quality and price which reflects the aggregated demands of passengers. Only airlines and not the CAA or the airport regulator have the experience and the knowledge of the passengers to understand how much of their vision of air travel that the passengers are willing to pay.”
In response to Mr Haines’s second point that a secondary duty would cause confusion and would always be trumped by the primary duty to the consumers, BA states: “There is no evidence that such a duty would cause confusion. As there is no evidence that the interests of passengers and airlines are in conflict, there is no reason to believe that a secondary duty will be trumped by the primary duty to passengers. The inclusion of a secondary duty would simply reflect in statute the existing consensus and the existing policy position of the CAA that airlines’ interests are well aligned with those of the passenger, but it would ensure that airlines and passengers were protected against a subsequent change in the policy position of a regulator. One response to this would be to say that if airline interests are aligned with those of passengers, airlines should be content with the passenger interest being the clear focus of regulatory attention. However, passengers are unable to know the true cost of the preferences they express, and a simplistic appeal to survey data on passenger requirements from airport services is unlikely to fairly reflect the trade-off between service quality, capacity and price, which is better expressed by airlines. The CAA’s current duties include a clear duty to further the reasonable interests of airport users, where an airport user is defined as an airline. This duty has never proved problematic, and has not prevented the CAA from giving appropriate weight to the interests of passengers.”
On the third element of the CAA’s views, which concerned the finely balanced area of regulatory decision, BA states: “This is a disturbing confusion of the proposed new primary duty. The primary duty is clear that the CAA must act to further the interests of passengers current and future. As such, where passengers’ or other parties’ interests do not align, the CAA must always act in the interest of the passenger. To the extent that the airline and passenger interests align, and the CAA’s starting point is that they do, and diverge from investors’ interests, the new legislation already clearly requires the CAA to act in passengers’ and airlines’ interests. BA do not accept that a secondary duty towards airlines would give them undue weight in CAA decision making, over and above that proposed by the new legislation.”
BA states that the CAA’s final point about other regulators results from a confusion about the nature of the aviation industry: “Within airport regulation, this is tantamount to arguing that the CAA does not have a duty to Birmingham airport when regulating Heathrow. In fact it does, and were Birmingham to be materially affected by a CAA decision at Heathrow, we believe it would have a right to appeal. In making this point, the CAA fail to recognise their own position that the interests of passengers and airlines are closely aligned. A better argument is therefore whether other regulators have a duty towards their consumers in setting regulation. The answer is that all of them have a primary duty, or equivalent, to their consumers. It is true that consumers typically do not have a right of appeal, but that is because economic regulation is complex and expensive to appeal. It is therefore beyond the resources of private individuals to appeal price control decisions. In aviation, it is common ground that airlines, who are both incentivised and resourced to appeal economic regulation decisions and whose interests typically align with the passenger, are well placed to act for the consumer and exercise this right of appeal.”
I am interested to hear the Minister’s views on the amendment, as it is designed to seek clarification of the first recommendation of the Transport Committee report in January:
“We recommend greater clarity in the wording of the Bill's definition of users of air transport services. We suggest that users be defined as ‘passengers and shippers of cargo both present and future’.”
We have just covered that point.
“There should also be more specificity in the CAA guidance regarding the relative weight that should be put on current versus future air transport users’ interests. We further recommend that the special position of airlines be recognised by way of a secondary duty in the Bill.”

Nigel Mills: I think the hon. Gentleman is arguing that there should be a secondary duty on airlines. Does his drafting make it clear that the duty to airlines would be secondary and that the one to users would be primary? Or does his drafting make the two equal? That is how I read his proposal.

Jim Fitzpatrick: I apologise for any confusion. The primary duty is to the passenger—the consumer. Our line is that there should be a secondary responsibility within the CAA, enshrined in the Bill, to say they should be consulted. As I said at the beginning, the passenger will trump the secondary duty. That is reflected right the way through the interest. The Bill clearly says the CAA will consult airlines all the way through. However, a number of airlines have contacted members of the Committee of all parties, to say that they do not think it is an adequate protection just to be consulted. They think something should be written into the Bill. That is why we are using the amendment to ask the Minister for the Department’s views.

Theresa Villiers: I am grateful to the Opposition for raising this issue, which is clearly important for stakeholders and airlines in particular. My officials and I looked at the issue extensively prior to publication of the Bill. It is key to get the matter right, but I cannot agree to the amendment as I do not think it would improve the Bill. I fear it would significantly weaken it because it would undermine our efforts to put passengers at the centre of airport regulation.
A fundamental element of the Bill is to update the current regime, which is universally agreed to be out of date and in need of reform. One problem with the current regime is that the CAA has four equal duties that it has to consider in carrying out its economic regulatory functions. That has led to uncertainty and lack of predictability, particularly where different duties pull in different directions. The changes that the Bill proposes in relation to the primary duty will sharpen the CAA’s focus on passengers and the owners of cargo. It will increase transparency and support efficient investment by providing greater clarity and certainty for stakeholders about CAA decision making.
The primary duty seeks to provide clarity to the CAA that the interests of the passenger must take precedence and gives the consumer, as the end user of air transport services, a central role in the new system.

Tom Harris: The Minister mentioned quite rightly that the passenger, the end user, must be the primary focus. Can she say in practical terms what difference will be made to the experience of the daily commuter or annual holidaymaker as a result of the clause? What change will occur in that travel experience, if that person is to be the focus of the legislation in an approach to regulation, for example?

Theresa Villiers: There is a range of potential improvements in the passenger experience that could flow from the primary duty in clause 1, accompanied by the licensing regime that we will come to later in the Bill. In particular, that includes focusing investment on the sort of improvements that passengers want, such as better baggage-handling equipment and better surface access. However, it will also enable the CAA, via the licence system, to intervene in real time, rather than a five-yearly price review being the main instrument of regulation. When things are palpably going wrong at an airport, such as its being not prepared for extreme cold weather, the CAA has much more flexibility under the licence system to intervene and get things fixed, rather than having to wait five years for a price control review. I am sure that we will have further opportunity to debate that, but those are the sorts of improvements that we expect passengers to experience as a result of the modernisation of the regime.

Tom Harris: Perhaps I was not quite clear. The Minister has discussed changes in winter resilience or baggage handling that would, I expect, be made by airports anyway. Will she discuss the actual change of experience that individual passengers will have as a result of what she is proposing or of what she is opposing from my hon. Friend the Member for Poplar and Limehouse? For any individual, what will their change in input actually be?

Theresa Villiers: I will shortly come on to mention instances of where airline and passenger interest may conflict. As a Minister, it would not be proper for me to predict exactly how the CAA will approach different issues relating to airports, but there are instances of where airline interest is not aligned with passenger interest. The most obvious example is that it is in the passenger’s interest to have a wide range of catering outlets at the airport, but that may not be in the interests of an airline that is selling food on its planes. In those circumstances, it is only right that the CAA should look to the primary duty when deciding on its approach to economic regulation, and that the passenger’s interest must prevail.
Surface access is a similar issue. It is not unreasonable to believe that passengers value high quality public transport links to airports, but many airlines may, frankly, not care very much and they may resent being asked to contribute to meeting the costs of those surface transport links. In those circumstances, the CAA should be looking to the passenger interest rather than that of the airline.

Seema Malhotra: Can the Minister envisage a scenario where something that is perceived to be in the passenger interest may actually have adverse or perverse consequences if the interests of airlines are not taken into account? For example, if there was a measure that was in the interests of the passenger experience, but would cost a disproportionate amount to implement, and if there was no obligation to take account of airline interest, there could be a disproportionate impact on the passenger through a rise in prices due to the increased costs being passed on by the airlines.

Theresa Villiers: The hon. Lady is absolutely right to highlight the importance of ensuring that the investments that regulated airports go ahead with do not place an excessive or unreasonable burden on their users. However, there is no need for a supplementary or primary duty to airlines to deliver that. The Bill requires the CAA to take a proportionate approach when making its decisions and have to regard to the reasonable needs of users.

Tom Harris: I want to pursue a point that the Minister made a few minutes ago. I find it extraordinary that airlines would have different interests from passengers when it comes to surface access to airports. For an obvious market reason, it is surely always in the interests of airlines to accommodate and to facilitate the arrival of passengers at airports. Perhaps she is aware of examples of which I am not where airlines have opposed improvements in surface access to airports, but it seems that that would be contradictory to their own interests.

Theresa Villiers: I agree with the hon. Gentleman; there are many positive benefits to having top-quality surface access, and airlines stand to benefit from their passengers having ready access to high-quality public transport links to airports, but I suspect that some airlines would very much resent some of their landing fees paying for those improvements. I do not want to put words into the mouths of airlines, but they can be very robust in defending their commercial interests and arguing that what an airport proposes, and the regulator approves, is excessive and too expensive. I do not want to single out any particular airline, but some are vocal in the extreme about what they do not want to ask their passengers to pay for, so I am afraid that there is no consensus. There may be broad consensus that it is good to have good transport links, but there is certainly no consensus on who should pay for them and how much.

Graham Stringer: The Minister is absolutely right that there is competition between airlines and airports on duty-free and other catering outlets, but in the second part of her response to the initial question from my hon. Friend the Member for Glasgow South, she said that the CAA could interfere in and direct an airport’s investment in catering facilities. Is she really saying that that is a consequence of the Bill?

Theresa Villiers: I am saying that we should ensure that the CAA has flexibility, so if there were regulatory issues on such a matter, it would have maximum flexibility. Ultimately, its goal should be the protection of the interests of the end users. I am not contemplating the CAA micro-managing retail facilities, but, again, the approach that airports take to such facilities is controversial for some passengers, and I do not think that it is necessarily sensible to exclude it explicitly from the Bill. The hon. Gentleman need not have too much anxiety that the CAA will suddenly come out with detailed proposals on the approach taken to food retail in airports.

Graham Stringer: I fear the powers that the Minister is giving to the CAA, rather than what it will do. If that will not really be an application, can she give examples of where the CAA may pursue the passengers’ interests and not the airlines’ interests?

Theresa Villiers: Additional capacity and entrants to the market are other important areas where the interests of passengers and airlines may conflict. Extra capacity and additional airlines being able to start operating from an airport are not necessarily in an airline’s interest, so that is an important example of where the CAA would have to consider the end users’ interest rather than the airlines’. If I may, I will make a little progress, because otherwise the Chairman might start frowning at me. You have been very patient so far, Sir Roger.

Roger Gale: So far.

Theresa Villiers: I am grateful for that.
I return to the shadow Minister’s explanation of amendment 9, because I fear that he has not understood how it would work. It would not introduce a supplementary duty, but a primary duty to have regard to the interests of airlines. It imports equivalence, as my hon. Friend the Member for Amber Valley pointed out, and that is one reason why I have such strong reservations. Introducing equivalence would fundamentally undermine the goal of the Bill—to protect and promote the interests of end users.

Gavin Shuker: The Minister is saying that clauses 1 and 2 describe the primary duties of the CAA, despite the fact that the term “where appropriate” is used.

Theresa Villiers: As I said, amendment 9 would introduce a new primary duty to airlines. I do not think that there is a case for a primary or secondary duty, and I cannot support the amendment. Regardless of what the amendment technically means, rather than focus on the technicalities, I am happy to respond to the arguments put by the shadow Minister on the basis of a supplementary duty, because that is a key matter for us to consider. It is clear what sort of questions the Opposition Front Bench wishes me to answer.

Gavin Shuker: I do not in any way intend to be difficult, but I want to be clear about the Minister’s reading of clause 1(2):
“The CAA must do so, where appropriate, by carrying out the functions in a manner which it considers will promote competition in the provision of airport operation services.”
Does she consider that to be a primary duty or a secondary duty?

Theresa Villiers: Clauses 1 and 2 involve primary duties.
I now return to the meat of the question. Whether the amendment is more extreme if it is a primary duty and less extreme if it is a secondary duty, the same points underline my opposition to the amendment, regardless of its technical content. Of course, in many instances the interests of airlines and passengers will coincide because of the competitive pressure on airlines to deliver what their passengers want. They are in the business of doing that. By opposing the amendment, I am not for a moment saying that the airlines do not represent the interests of their passengers; in many cases, the interests of passengers and airlines are aligned.
I also agree with the point made by Barry Humphreys of BATA, and repeated by the Opposition Front Bench spokesmen in reference to BA’s statement, that it will often be airlines that have the knowledge, motivation and resources to press the case for the improvements that end users want and that hold airports to account, rather than the pressure coming directly from passengers. That is why the Bill gives such an important role in the regulatory system to airlines, particularly on licence conditions and appeals. As we will come on to, the appeals rights given to airlines are infinitely stronger than the cumbersome and limited judicial review rights under the current regime. The Bill makes it clear that we take the role of airlines in the process seriously because of the many instances where their interests are aligned with the interests of passengers.

Nicholas Dakin: I draw attention to the British Air Transport Association’s submission, which underlines its view that its understanding of the detail makes it a strong advocate or proxy, as the Minister said earlier, for the end user. But—this is the point of my intervention—BATA also says:
“Without a Secondary Duty to airlines there is a greater likelihood that appeals will be brought against CAA decisions and a greater risk that the regulator, rather than the competitive air transport market, will determine what is in the passenger’s best interests.”
I would appreciate the Minister’s views on that.

Theresa Villiers: Inevitably, early in the process, it is almost guaranteed that there will be quite a lot of appeals as the system settles down. Anxiety about the number of appeals should not drive our decisions about what is the appropriate regulatory framework. Frankly, as I have said before, airlines are robust in pursuing the interests of their passengers and shareholders, and they will appeal where it is appropriate to do so.
Going back to the core of what the Bill is trying to do, I refer the Committee to the evidence of Andrew Haines from the CAA. He made it clear that listening and responding to the concerns of airlines, where they represent the interests of passengers, will be a key task for the CAA under the new regime. As he pointed out, there are many instances where the Bill and the new regime will require the CAA to consult the representatives of airline groups. The airlines will be key players in the framework and it is not necessary to introduce a supplementary duty to ensure that their voices are appropriately listened to by the CAA. As I have said, airlines have a stronger role under the new framework than under the current framework that we are seeking to replace.
As we have already discussed, there will be instances where the interests of airlines and passengers conflict, which may not happen often, but it clearly could happen. Emma Gilthorpe from BAA gave a few more examples. I hope the Committee will agree that, where the interests of passengers and airlines are not aligned, the regulator should favour the passenger.

Seema Malhotra: I fully appreciate the Minister’s response. However, there is a fundamental difference between the opinion of someone giving evidence and what may or may not happen over five, 10 or 15 years if we are looking at a new framework that will have to go beyond the individuals currently involved. I am still not clear why there would be a detriment in having a supplementary or secondary duty, aligned with what people believe, which would future-proof the way the CAA and airport regulation works in future.

Theresa Villiers: Airlines’ interests are protected in all cases where they are aligned to passenger interests. That is an important benefit that the Bill will give them. As I have said, it is entirely reasonable for the Government to take the position that where airlines’ interests are not aligned with those of air passengers—that does happen—the regulators should look to protect the customers of airlines rather than the companies themselves.

Tom Harris: Is not the point that of course the passenger must be the priority, but the fact that this would be a secondary priority would give a clear signal to the CAA that airlines were not as important as passengers? A commitment to putting passengers first could be put in the Bill while making it clear that where the interests of airlines did not conflict with those of passengers, they would be preserved as a secondary consideration.

Theresa Villiers: That would be an interesting thing to consider if the Opposition had tabled an amendment that included a secondary duty. But they have not so I do not think, strictly speaking, that I should respond to that.

Gavin Shuker: Will the Minister give way?

Theresa Villiers: One more time and then I am going to finish.

Gavin Shuker: I am grateful. I will give a practical example where an airport might choose to invest in air bridges instead of buses to get people to planes. Why is the Minister so opposed to having choice between different airlines? For example, one airline may choose to operate on a low-cost model and another on a high-cost model. Surely the best interests of passengers are best served by having choice and not purely by being represented as a mythical passenger with one voice.

Roger Gale: Order. I am listening to the debate. You are trying my patience a bit because the shadow Minister indicated that he wanted a stand part debate on this. You have a choice but you are pushing at the limit. If you want the stand part debate now you get it now or you have it at the end. We either stick to the amendment or we have the stand part debate. I do not mind which, but do not push your luck too far.

Theresa Villiers: I will not try your patience, Sir Roger. I can reassure the hon. Gentleman that the goal of the Bill is to enable the CAA to make decisions on how to prioritise the different needs of passengers. We are not mandating a particular level of service. We are leaving those decisions to the airports, overseen by a regulatory structure which has as much flexibility in it as possible. I do not for a moment say that there is a particular type or level of investment that has to be mandatory under the scheme. I want to give the discretion to the expert regulator to make appropriate regulatory decisions on such matters.
The amendment would be opposed by a number of groups. It would not be welcomed by the CAA, by airports or by passengers. Airport operators in their oral evidence argued for the retention of a primary duty to passengers, as did Passenger Focus. My officials have met airline representatives on a number of occasions both before and after the publication of the Bill. Certainly there are several other issues that airlines are probably focused on; the primary duty or supplementary duty has not been the main focus of recent discussions.
We have sought to reassure airlines that their proximity to passengers’ interests is acknowledged in the airline right of appeal that is enshrined in the Bill and that, in carrying out its regulatory duties under the new framework, the CAA will need to consult airline representative bodies on a range of key decisions. Those consultation obligations are taken very seriously, as the chief executive of the CAA indicated in his evidence to the Committee. BAA’s evidence to the Committee detailed various ways in which airline representatives would need to be consulted on the proposals in the Bill. Not only this Government but the previous one rejected the inclusion of a duty to airlines in the new regime, for the reasons that I set out. In light of the significant drawbacks that amendment 9 would create, I hope the Opposition will withdraw it. If they do not, I must ask Committee members to vote against it.

Jim Fitzpatrick: We hear what the Minister says, particularly regarding the potential confusion caused by our description of a secondary duty. Perhaps it would have been better to call it a supplementary duty. We welcome the fact that the appeals procedure will improve airlines’ ability to make representations in the system, and we welcome the flexibility that it will give them. We are clear that the CAA will have to take account of airlines’ views. We will reflect on the matter before Report, but in the light of the Minister’s explanation, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jim Fitzpatrick: I beg to move amendment 12, in clause1,page2,line10,at end insert—
‘(ca) the need to ensure that the holder of a licence under this Chapter complies with applicable planning laws,’.

Roger Gale: With this it will be convenient to discuss amendment 14, in clause1,page2,line14,at end insert—
‘(ea) the need to promote due consideration on the part of each holder of a licence under this Chapter of issues arising out of surface transport links to and from airports,’.

Jim Fitzpatrick: We will further outline our views on the industry’s environmental responsibilities when we debate amendments 10, 11 and 16, which cover the need for a general environmental duty. Amendments 12 and 14 are similarly drafted in that they both refer to airports’ responsibilities in respect of planning laws. In “Reforming the Framework for the Economic Regulation of Airports: Decision Document”, which the Department for Transport published under the previous Government, we commented that
“we believe the CAA should satisfy itself that an airport operator is giving appropriate consideration to its environmental obligations and the requirements of the planning process before it agrees to incorporate a proposed investment into a price control. However, as a result of stakeholder responses and further consideration of evidence, we agree there is a risk that the general wording proposed in the consultation document could be interpreted more widely than intended. In order to avoid the possible risk of distortions arising as a result of airports subject to economic regulation being subject to additional environmental obligations, we have decided that the CAA should be required:
‘to have regard to the airport operator’s legal obligations to comply with applicable environmental and planning law’”.
The document continues:
“We do not believe that in complying with this duty, the CAA should seek to pre-empt the conclusions of the planning authorities or duplicate the role of the relevant enforcement bodies. The CAA is funded by industry and as the airline market is broadly competitive, the costs of the CAA duplicating the roles of the planning authorities or the Environment Agency, for example, would be passed on to passengers. This would clearly be unacceptable.
It is the role of the airport operator to make sure the proposed investment does not violate environmental obligations it is subject to and has a good chance of getting planning permission. However, we believe the CAA should be satisfied that the airport operator is giving appropriate consideration to its environmental obligations and the planning process before it agrees to incorporate a proposed investment into a price control. In satisfying itself of this, the CAA should not duplicate the role of the planning authorities or the Environment Agency.
We believe this supplementary duty sends a clear message to industry about the importance of ensuring that economic regulation is consistent with an airport’s environmental obligations (resulting from both environmental and planning law), in a way that we believe imposes minimal additional burdens on either the CAA or the airport operator.”
We have tabled the amendments because we still consider those comments appropriate. It is important that the CAA does not duplicate that which has been done at extra cost to it and the industry, but we believe it has a role here. As I mentioned, we will cover some of the same ground in the next group of amendments, which deal with the regulatory asset bases of airports and recovering costs.
Amendment 14 can be considered in relation, for example, to High Speed 2 and Heathrow. Heathrow’s location is one of its strongest attractions, and although it may be overlooked in the proposal for an estuary airport, its being in the west makes it attractive to points further to the west of England and Wales, as well as north to Birmingham, due to the motorway links. The cancellation of the third runway, designed partly to maintain UK connectivity to our only hub airport, places further stress on Heathrow, and issues raised in relation to the sale of British Midland International to International Airlines Group demonstrated those concerns. I might be wrong, but I think that Heathrow services six UK cities now, while Schiphol services 18, yet Heathrow advertises itself as the UK’s hub airport.
The amendment raises the question of surface links to airports being part of any licence agreement with the CAA, and is designed only to probe the Government. The Transport Committee referred to that issue in paragraph 38 of its pre-legislative scrutiny report:
“Without giving the CAA a supplementary duty”
—I think that we got the language right this time, Minister, as opposed to “secondary”—
“on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance. Whilst, as the Minister says, there may be ‘absolutely no doubt’ about measures taken to comply with statutory environmental obligations, there remains a doubt about whether the costs of discretionary measures, such as improved public transport access, can be recovered by airports in charges to airlines”.
That clearly is the key point.
At a meeting yesterday, representatives of Gatwick referred to the state of the Gatwick Express. While they proudly pointed out their recent additions of airlines and destinations—Vietnam, Hong Kong, Korea and Air China—they raised concerns about the transport links between Gatwick and London, and the difficulty that their passengers have with respect to the Gatwick Express. In evidence to the Committee last week, Gatwick’s representative, Kyran Hanks, said:
“In general, we support the direction of the Bill and think it is a timely change from the Airports Act 1986, but there are two points that I want to bring up. First, Gatwick is now in separate ownership and it is not clear from the Bill that the separate ownership of Gatwick airport, and the competitive dynamic that has now been introduced in the south-east, is being adequately supported by the drafting”
—obviously, we will come on to that point in relation to licensing. He continued:
“The second aspect I would ask you to consider is the Government’s policy on airports—I have to get this right—being better, not bigger. It is not clear whether some of the surface access provisions at Gatwick airport, particularly the provision of the Gatwick Express, will be protected by the passage of the Bill. We have seen the Gatwick Express degrade over the past two to three years and we hope that the Bill will reverse that trend. I ask you to consider those two aspects.”––[Official Report, Civil Aviation Public Bill Committee, 21 February 2012; c. 8, Q6.]
If the Government want better, not bigger, as they clearly do, it seems necessary to support that type of improved infrastructure request from Gatwick. Hearing the Minister’s views would be useful; I know that the Department is looking carefully at the Gatwick link, but clarification on how the Minister sees the amendment will help us to decide whether to press it to a Division, or whether to seek to withdraw it in due course.

Theresa Villiers: I am grateful to the hon. Gentleman for tabling the amendment, and for his explanation of the rationale behind amendments 12 and 14.
As hon. Members may appreciate from my evidence to the Committee, I feel I cannot offer the Government’s support on the proposed changes for the following reasons. Both amendments look to add supplementary duties—I acknowledge that they are certainly supplementary in this instance—to those already contained in clause 1. As I have said in evidence, I am in absolutely no doubt about the importance of ensuring that airports, both regulated and unregulated, comply with planning law and that they take very seriously the importance of good surface transport access for passengers, as we have discussed. I believe, however, that the Bill already affords the CAA the correct balance of duties without the need for additional supplementary duties along those lines.
I do not feel these amendments are necessary because the Bill as drafted would permit the CAA to have regard both to local planning law and to the importance of surface access. As we have already discussed, the Bill sets out a clear primary duty to further the interests of passengers and owners of cargo with a short, focused set of supplementary duties that the CAA must have regard to when carrying out its primary duty.
In practice, the supplementary duty proposed in the amendments would have no substance. I do not believe, for example, that amendment 12 would add anything substantive to the Bill. It is the sort of amendment that would be difficult to get past parliamentary counsel if it were to end up in a Bill. It is self-evident that any regulator, when subject to a framework that seeks to replicate a competitive market and protect the interests of end users, can permit investment in measures to comply with planning law. In a competitive market, airports can and have to invest in measures to comply with planning law. It cannot possibly be in the interests of passengers that an airport be fined or closed for failing to comply with planning law.
Therefore, the powers—the supplementary duties—contained in amendment 12 fall fairly and squarely within the powers that the Bill, as drafted, already gives to the CAA. I cannot believe that an airline that sought to challenge investment in measures that were designed to comply with planning law would have any prospect of challenging them as inappropriate.

Jim Shannon: Just for clarity, planning regulations and environmental controls are devolved matters in the other regions of the UK, for instance, Northern Ireland. How will this provision affect the regions of the UK—Scotland, Northern Ireland, Wales—where planning is devolved and controls of the nature indicated by the Minister would be UK-led? I am keen to see how the influence can happen in the regions without their say so and co-operation.

Theresa Villiers: As I said, I do not think the amendments would have an impact one way or the other. I hope I can provide reassurance: there is no doubt that a regulatory system designed to further the interests of passengers and to replicate a functioning market can enable the CAA to authorise investment aimed at compliance with planning law.
In response to the shadow Minister’s questions about the Gatwick Express and Heathrow Express, we are confident that they will continue to be treated in the same way as now—that is, to be part of the regulatory asset base. The reason why the previous Secretary of State, my right hon. Friend, the right hon. Member for Runnymede and Weybridge (Mr Hammond), decided in July 2010 to omit a supplementary duty along similar lines was that we do not feel it would have any substance in practice. As the shadow Minister said, this matter was also considered by the previous Government. Regardless of whether an express supplementary duty is included in the Bill, the CAA will of course need to have proper regard to airports’ obligations to comply with all applicable legal obligations, including planning law.
No doubt we will have a debate under the next set of amendments about wider environmental considerations, but on the planning law amendment, there can be no doubt that it would be within the powers given to the CAA to authorise investment to enable an airport to comply with local planning law.
On amendment 14 and surface transport links, as we have already discussed, I agree that they are very important for any airport to be successful. High quality public transport access to airports can also deliver a wide range of benefits, including relief of congestion on local roads and addressing concerns about air quality where relevant. I am confident that the Bill in its current form will enable the CAA to ensure that these considerations are taken into account where it is in the interests of passengers to do so. The CAA is certainly confident that the Bill will enable it to permit investment in surface transport projects by regulated airports. Again, there is no need for in-depth surveys of passenger views to work out that they value good surface access. Improving and authorising investment on surface access is consistent with the primary duty to safeguard passengers’ interests.
Strong surface transport links is just one of the many issues that are important to passengers. Placing a specific obligation on the CAA in that context would not be right, because it could create an unequal weighting of this issue over other issues that might also be important to passengers. The CAA will need to make important trade-offs between competing issues, and it should be provided with the flexibility to determine what is most in passengers’ interests and what is important to them.
Furthermore, the inclusion of such a supplementary duty could create market distortions where other, non-regulated airports are not under similar obligations. Again, these are principles that we will consider in more detail in the next group of amendments.
As with the concerns raised about the role of environmental considerations in economic regulation, clause 1 is not the appropriate vehicle to achieve the Opposition’s goal. The Government believe that all airports should take surface access seriously, which is one of the reasons why our extensive transport improvement programme includes the tube upgrade, Crossrail, Thameslink and HS2.
All airports should take surface access seriously, and the economic regulation of airports is not the appropriate mechanism to place special additional burdens on airports. If we are to look at surface access, we should look at it fairly across the board and across the entire airport sector, whether regulated or not.
I hope I have provided some reassurance to the shadow Minister. I would be grateful if he withdrew his amendment; if not, I ask my hon. Friends to vote against it.

Jim Fitzpatrick: I am sorry, but we feel that amendment 12 is worth pressing. I mean no disrespect to the Minister, but we see an environmental duty as central to the Bill. We do not believe that these two amendments, which address environmental protection, planning law and surface access to airports, would lead to a distortion in the market. They are entirely appropriate and would sit squarely within the CAA’s responsibility to take such matters into account when regulating Britain’s airports.
We wish to press amendment 14 at the appropriate time.

Question put, That the amendment be made.

The Committee divided: Ayes 10, Noes 13.

Question accordingly negatived.

Roger Gale: I have taken note of the fact that the hon. Member for Poplar and Limehouse wishes to move amendment 14 formally. I want to explain to the Committee that, although amendments 12 and 14 are grouped together, amendment 14 finds its place slightly later in proceedings. There will be no further debate when we come to amendment 14 because it has already been debated; it will be moved formally at that point, which may well be under Mrs Riordan’s chairmanship.

Jim Fitzpatrick: I beg to move amendment 10, in clause1,page2,line14,leave out ‘and’ and insert—
‘(ea) the need to work with NATS, the Secretary of State and air transport service providers towards meeting the United Kingdom’s carbon reduction obligations,’.

Roger Gale: With this it will be convenient to discuss the following: amendment 11, in clause1,page2,line14,at end insert—
‘(ea) the effect on the environment and on local communities of activities connected with the provision of airport operation services at the airport to which the licence relates,’.
Amendment 16, in clause2,page3,line5,leave out ‘and’ and insert—
‘(ca) the effect on the environment and on local communities of activities connected with the provision of airport operation services at the airport to which the licence relates, and’.

Jim Fitzpatrick: These are very important amendments, as I mentioned earlier. Amendment 10 requires the Minister to explain why the Bill does not put the appropriate emphasis on aviation contributing to meeting the UK’s carbon reduction obligations. We have called upon the Committee on Climate Change to advise on tougher CO2 emissions targets for the aviation industry. The Climate Change Act 2008 introduced by the previous Labour Government requires that emissions be reduced by at least 80% by 2050, compared with 1990 levels. To put us on target to achieve this, the Committee on Climate Change’s fourth carbon budget sets an interim target of 50% by 2025. Aviation clearly has a role in this, and Ministers need to clarify what that should be. After all, the Prime Minister says he wants this to be the greenest Government ever.
It is clear that the aviation industry in all its elements is working hard to cut its emission levels. Indeed, it has already stated that it can make the 80% reductions compared with 2000 levels, and it is our view that the Committee on Climate Change should advise on the case for tougher targets. Indeed, my right hon. Friend the shadow Secretary of State for energy and climate change made that case on Second Reading. In its written submission and in oral evidence, the Aviation Environment Federation made a clear case for the CAA to have a role in all this. Referring to the CAA and the environment in the context of economic regulation, it said:
“The recent review of the CAA’s role and function began in 2007 with the Pilling Review and continued in 2008 with the setting up of an advisory panel on economic regulation.
One of the key recommendations of the Pilling Review was that the CAA should be given a general statutory duty in relation to the environment, together with a ‘clear policy framework from Government’. Noting that existing legislation refers to a role for the CAA in ‘securing the sound development of the civil air transport industry of the United Kingdom’”.
I am sure the Committee will be aware just how much has been achieved by the industry and how much research and development is being undertaken by its various components in conjunction with academia. I recently visited Imperial college to see how many different projects are under way there to support the greener, cleaner aviation industry. The amendment would create a statutory duty on the CAA to work towards those ends. The Minister was forceful in her response to the hon. Member for Norwich South when she said:
“I am pleased that someone has brought up the environmental issue, because I want to be absolutely clear that I yield to no one in the seriousness with which I take the environmental impact of aviation… I have always been rigorous in asserting that we need to take seriously the environmental impact of aviation, and that of course requires, in appropriate circumstances, legislation and regulation. My point is that airport economic regulation is not an appropriate vehicle for delivering that kind of environmental regulation.”––[Official Report, Civil Aviation Public Bill Committee, 23 February 2012; c. 83, Q188.]
So if not here, why not; and if not here, where? Pilling thought this to be the case and the point was raised not only by the AEF. The Transport Committee also had a view when it said in January in paragraph 34 of its report:
“The previous Government’s list of proposed secondary duties for the CAA, in respect of economic regulation, included:
‘to have regard to the airport operator’s legal obligations to comply with applicable environmental and planning law.’”
The Minister also suggested that a supplementary duty on the environment was unnecessary, given that airports voluntarily invest in improving their environmental performance because it is in their commercial interest. The Transport Committee subsequently said:
“Without giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance.”
So, will environmental issues drive passenger choice? We will come later to the other questions of noise and air quality, which are equally important environmental matters. When asked in the evidence sessions what criteria passengers use for choosing airports, several witnesses cited cost and convenience. We would argue that few passengers would look at the environmental credentials of an airport in making travel plans. What they want is to fly to a particular destination from the most convenient departure point at the best possible price. I do not argue for a second that the industry does not accept its environmental responsibilities. It clearly does, but it is for the Government to set targets and then measure and ensure that they are met. Amendment 10 would allow that to happen.
On amendment 11, I do not want to repeat the points that I have made in support of amendment 10. Several points obviously also apply to the environment, but amendment 11 has a much wider scope. The proposed new subsection that it contains was raised on Second Reading by my hon. Friend the shadow Secretary of State for transport when she said:
“Although it is right that we set out a primary duty on passengers to send a clear signal to the CAA about how it should manage competing interests, it is right also that we set out further duties. In doing so, however, the Government have chosen to omit the reference to environmental obligations which we intended… That is a mistake, so I very much hope that the Minister will reflect on it and think again.”—[Official Report, 30 January 2012; Vol. 539, c. 575.]
In March 2009, the consultation document on economic regulation, published by the then Secretary of State, proposed that
“the CAA should have an environmental duty with respect to its economic regulatory functions.”
The final report of the Cave review recommended
“a duty on the CAA to protect the environment, subject to guidance on specified environmental matters by the Secretary of State.”
In December 2009, we published our decision document on economic regulation and concluded that one of the regulator’s supplementary statutory duties should be
“to have regard to the airport operator’s legal obligations to comply with applicable environmental and planning law.”
I mentioned earlier the strongly made rebuttal points of Mr Haines of the CAA in opposition to a secondary duty for airlines. On the environmental duty, however, the opposite seems to be the case. On the statutory duties of other regulators, it can be seen that, quoting from submission CA13, the Office of Rail Regulation’s duties include
“‘to have regard to the effect on the environment of activities connected with the provision of railway services’ and ‘to contribute to the achievement of sustainable development.’”
Ofgem’s duties include
“‘[to] have regard to the effect on the environment of activities connected with the generation, transmission, distribution or supply of electricity’, ‘to have regard to any [social and environmental guidance] issued [by the Secretary of State]’ and ‘to contribute to the achievement of sustainable development.’”
Ofgas’s duties include
“‘[to] have regard... to the effect on the environment of activities connected with the conveyance of gas through pipes’ and ‘to contribute to the achievement of sustainable development.’”
Ofwat’s duties include
“‘to have regard to any [social and environmental guidance] issued [by the Secretary of State and Welsh Assembly]’ and ‘to contribute to the achievement of sustainable development.’”
Perhaps the Minister will comment on the decision to remove the environmental duty, because the Transport Committee came to a similar view to that proposed in the amendment when it, as I have recently quoted, said:
“Without giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance.”
Also in submission CA13 are three examples of what are known as regulatory asset bases. To emphasise why many believe that a statutory duty is an absolute requirement in the Bill, I want to quote them. Example 1 states:
“Homeowners around Heathrow whose properties were threatened by the third runway were offered a ‘Property Market Support Bond’ by BAA, to mitigate the blight. Similar arrangements were introduced by BAA for homeowners around Stansted Airport in 2004 threatened by a second runway. In both cases, the arrangements were supported by the 2003 Air Transport White Paper but they were nevertheless voluntary. Under the present economic regulatory regime airport operators can include the costs of such arrangements in the regulatory asset base (‘RAB’) for each airport, which enables the costs to be recovered from airlines through airport charges. If, however the CAA’s primary statutory duty in economic regulation is towards the passenger and there is no duty upon the CAA to have regard to environmental or community effects, airlines could challenge the legality of any CAA decision which sought to allow such ‘discretionary’ expenditure to be included in the RAB.”
Example 2 states:
“In submitting development plans for airport expansion, airport operators generally include measures to mitigate environmental and community effects, e.g. improved public transport provision, landscaping and energy efficiency measures. If planning consent is granted, some of these measures will be defined as formal planning conditions, e.g. those which are not considered contentious and/or are seen as an integral part of the proposed development and/or where there is not considered to be any significant risk of the developer not providing the promised mitigation. Under the new arrangements, any mitigation measures not formally defined as planning conditions and not required by law would be deemed to be voluntary and therefore inadmissible for the purposes of setting price caps. And if airport operators could no longer rely upon the CAA to allow environmental/mitigation expenditure in the RAB, this would deter them from doing anything more than the bare minimum required. At present the CAA has flexibility to make a judgement as to the reasonableness of the expenditure when considering its admissibility for the purposes of the RAB and operating costs—the key determinants of the price cap. This flexibility would be lost: the CAA would only be permitted to allow cost recovery where there was an absolute requirement for the expenditure arising from environmental or planning law.”
Finally, example 3 states:
“As well as planning conditions, approval of a development is invariably accompanied by a Section 106 Agreement”—
under the Town and Country Planning Act 1990—
“consisting of additional obligations which the developer voluntarily agrees with the planning authority. For airports, many of these will relate to reducing and minimising the effects on the environment and local communities. S.106 agreements tend not to be written in robust legalistic language and often relate to process not substance, relying upon the airport operator’s good faith to fulfil the spirit and not just the letter of the obligation. Many s.106 obligations can have significant cost implications for the airport operator. Hitherto, the operators of designated airports… have been able to recover the costs associated with honouring the obligations in spirit and not only to the letter. If, however, the CAA’s primary statutory duty in economic regulation is towards the passenger with no statutory duty… to consider environmental or community effects, airlines could challenge the legality of any CAA decision which sought to allow an airport operator to recover costs incurred in relation to s.106 obligations.”

Nigel Mills: I think I am following the hon. Gentleman’s argument, and I have some sympathy with it, but the amendments refer to “airport operation services”, which clause 68 defines as not including air transport services. Presumably, a lot of the noise and blight he is talking about arises because of the noise that planes make when they fly over people’s houses. The amendments would not allow that to be considered; they would allow only the on-the-ground functions to be taken into account.

Jim Fitzpatrick: It is certainly our understanding that the amendments would cover aviation generally and would protect local communities from all the environmental consequences that could affect them.
If there is no statutory duty, is there a possible risk? The statutory duty was included in the original Bill. In answer to question 67, Mr Haines, of the Civil Aviation Authority, said:
“We would not be averse to an environmental duty”––[Official Report, Civil Aviation Public Bill Committee, 23 February 2012; c. 38, Q67.]
However, he went on to qualify that. We believe there should be such a duty, and we will press the Committee for its view on that at the appropriate time.

Julian Huppert: It is a pleasure to serve under your chairmanship, Sir Roger. Thank you for calling me to speak on the amendments.
I agree with the shadow Minister that this is a key issue. There is no doubt that climate change is the biggest threat that we face as a species, and we must take serious action to reduce emissions and the effects of carbon dioxide and other pollutants.
We must look not just at the direct CO2 emissions that are officially measured, but at more general emissions, including those associated with things that we import into this country and with transport carbon dioxide. They are very important, but they are not fully captured at the moment. There is a global problem about how we account for transport carbon dioxide emissions.
Aviation pollution is a significant component of that. It is particularly an issue because it is amplified by the height at which many of the particles—carbon dioxide and various other things—are emitted. Aviation pollution is growing at an incredibly fast rate internationally, and that is why it is a problem.
I would very much like to see an environmental duty in the Bill. That is an important issue, and I raised it on Second Reading. The Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), said that if we could demonstrate that information would not be provided or actions would not happen under the Bill, Ministers would have an open mind and would be prepared to look further.
The information that that Minister was looking for has been made clear in the submissions from the Aviation Environment Federation, HACAN ClearSkies, the Gatwick Area Conservation Campaign and Stop Stansted Expansion, with which I am most familiar. I will not go through them in detail; the shadow Minister did a very good job of reading out their submissions almost verbatim, so I do not need to do the same. I trust completely that the Minister will have an open mind on the issue. The Minister has a very good track record on that.
I am pleased that those who were formerly in government have now understood the importance of aviation and the environment. They pushed heedlessly for a third runway at Heathrow, not caring about the impact that that would have internationally or about the local effects that it would have—it would have led to massive increases in the projected contribution to global warming—

Jim Fitzpatrick: Will the hon. Gentleman give way?

Julian Huppert: I will give way to the shadow Minister on this point. I look forward to hearing his apology for Labour’s support for a third runway at Heathrow.

Jim Fitzpatrick: The hon. Gentleman might have to wait some time for an apology from me to the Liberal Democrats, but he is entitled to wait as long as he wishes. Very strong environmental protections and criteria were laid down in respect of the proposal for a third runway. Those obligations were accepted by the industry. It said that it could meet them. The application of the planning approval in relation to the operation of the third runway was always conditional on those obligations being met. We have nothing to apologise for.

Julian Huppert: It is fascinating to hear the shadow Minister defend the policy that his party has now apparently moved on from, but I will leave that to him. According to the projections in its White Paper, by 2038 one quarter of the UK’s total contribution to climate change could have come from aviation.
However, my point was not about the shadow Minister and the former Government. While they were busy doing what they were doing and we were busy arguing against a third runway at Heathrow and in favour of high-speed rail, the Minister did manage to turn her party around to the very sensible position that it now has in favour of high-speed rail and against a third runway at Heathrow. I pay tribute to her personally for the work involved in doing that.
In her evidence, the Minister said that she yields to no one in the seriousness with which she takes the environmental impact of aviation—particularly noise, but also carbon—and that we need to take seriously the environmental impact of aviation. We can all believe her and trust that she means that and will do what she can to deliver on it. I am confident that she will be able to find a way to deliver an environmental duty in this Bill as it becomes an Act. I hope that the Minister will agree to take that issue away and look carefully at how that can be done. It is not a trivial issue. The shadow Minister and the amendment have shown why it is not trivial.
The amendment is certainly well intentioned, but it contains a number of flaws. That is why I hope that the shadow Minister will use it as a debating point, rather than a point on which to have a Division.

Mark Reckless: I thank my hon. Friend for giving way; I am cautious about disturbing the flow of his speech. He rightly pays tribute to my right hon. Friend the Minister and the Government in general for the environmental policies to resist airport expansion. Does he agree with me that given that strength on this issue, it is essential that Transport Ministers make these decisions? We do not want to delegate the decisions to the CAA any more than we want to delegate them to the Mayor of London.

Julian Huppert: I thank the hon. Gentleman for his comments. He and I should at this moment be in the Select Committee on Home Affairs, discussing extradition. That is a different use of aviation, but one that I will not dwell on. Yes, Government should set the policy, but the CAA should be able to ensure that it is implemented. We need to ensure that it is. I hope that the Minister will examine the issue that the hon. Gentleman raises, with regard to how exactly we go forward.
I said that I would outline why I have concerns about the particular form of the amendment. There are a number of issues. First, it does not mention what the shadow Minister himself mentioned at the beginning of his speech—the Committee on Climate Change. It is a great shame that the amendment does not talk about working with it; it advises the Government on setting and meeting carbon budgets and has already done a huge amount of work. Its 2009 report looked at many of the details about how one could try to keep aviation emissions the same as they were in 2005, while increasing passenger numbers.
As the shadow Minister correctly says, the aviation industry is working to become more efficient by putting more people on planes and using lighter planes and better engines. Rolls-Royce, for example, does a huge amount of work in my constituency of Cambridge, looking at new materials that would not require as much energy to keep cool, which is necessary to prevent melting. Passenger numbers can be increased by a certain amount, although not by the exorbitant amounts that have been talked about in relation to the idea of a “Boris island” airport, which I thoroughly oppose. However, there can be an increase. It is therefore very important that the Committee on Climate Change should have a key role.
There is also a fundamental problem in that, as I understand it—I am sure that I will be corrected quickly if I am wrong—emissions from international aviation are not currently included in the Government’s carbon reduction obligations. There is the slightly bizarre issue that domestic aviation is included, but international aviation is not. I understand exactly what the shadow Minister is trying to achieve, but requiring the CAA to try to meet the UK’s carbon reduction obligations would hit only domestic aviation. Although that is important, we want to see something broader. I am sure the Minister will be able to come up with a broader solution.
There is also the fact that only carbon dioxide emissions are dealt with. We have generally fixated on carbon dioxide, but the effects are actually much broader. The Committee on Climate Change’s 2009 report looked at 11 different factors in radiative forcing, some of which are positive; some emissions change the albedo and hence reduce the amount of heating. That is a very complicated factor. I would like to see an analysis of the effects of all those factors—particularly with respect to aviation, where emitting particles and other compounds are at very high levels. We need to go wider on that.
There is also the problem, raised on a number of occasions, that the provision would apply, as it is written, only to regulated airports. We should have an environmental duty on regulated airports, but we should also have such a duty on non-regulated airports, because the emissions are very similar; the world does not care where the plane took off from.
The Aviation Environment Federation made an interesting suggestion in its submission. It sought a general amendment in the Bill that would amend section 4 of the Civil Aviation Act 1982. I am not an expert as to whether that would be the best way to go ahead, but I hope the Minister will look at that when she tries to find a sensible way forward.

Nicholas Dakin: I am listening carefully to the hon. Gentleman, who speaks with passion and conviction as well as knowledge. However, I am unclear about his argument. He seems to be arguing for an environmental duty, but he does not like the amendment. He has not put down amendments, but he is looking for the Minister to come up with an alternative. Is that correct?

Julian Huppert: That is an extremely good summary of my position. I would like to see an environmental duty and I hope we will be able to work across all parties to find one that delivers the aims that we share. I have faith in the Minister’s ability to find that.
I have not managed to write the full details and go through all the legislative process; as anybody knows, writing amendments that are exactly what is looked for is not a trivial activity. The Minister has the resources of the Government, and I trust she will be able to come up with something. I hope she will take the matter away now and come back with something on Report that does deliver the environmental benefits that we need and that we, the Liberal Democrats, have campaigned on for many years. The previous Government passed an Act to deal with the issue. As the Prime Minister said, we aim to be the greenest Government ever, and I am sure the Minister will be able to deliver that in the Bill.

Tom Harris: I welcome the hon. Gentleman’s comments and look forward to his voting with us in favour of the amendment. Of course, it would be unconscionable and completely unexpected for a Liberal Democrat to say one thing before a vote and to turn it on its head and vote another way when it comes to a show of hands.

Julian Huppert: Will the hon. Gentleman give way?

Tom Harris: Yes, why not?

Julian Huppert: I hoped that we could reach a good conclusion; I am disappointed that the hon. Gentleman wants to make party political silliness instead. I hope he listened to what I said. I explained exactly why I could not support this form of amendment; there are a number of problems with it. I hope we will come up with something at the end that I will be able to support.

Tom Harris: I will try to contain my shock at the fact that the hon. Gentleman will not support us; I noted from the start that he is sitting with the Conservatives, so I am not particularly surprised.

Fiona O'Donnell: Does my hon. Friend have other examples of Liberal Democrats thinking that a Bill was flawed, but supporting it just the same?

Roger Gale: I am sure that the hon. Gentleman does not at the moment.

Tom Harris: You pre-empt my answer accurately, Sir Roger. Similarly, I will avoid the temptation to resurrect the old arguments from a couple of years ago about Heathrow’s third runway. That would be completely out of order in terms of this debate, although for the record I should say that I was and remain a strong supporter of it.
I want to hark back to the debate in January 2009, because the Minister took part in that from the Opposition Front Bench. In urging Geoff Hoon, the then Secretary of State for Transport, to oppose the third runway, she described climate change as “a compelling urgency”. That was after the now Prime Minister had said that his Government would be the greenest ever.
At the end of last year, the Environmental Audit Committee said that the Government’s decision to review the target for cutting emissions by half by 2025 makes business think that the Prime Minister is not really serious about being “the greenest Government ever”. Even the hon. Member for Richmond Park (Zac Goldsmith) said on a slightly different issue that investors in renewable energy might be reluctant to invest in alternatives to Britain’s out-of-date coal-fired power stations if they were not convinced that the Government would support it with policy. I fear that we are facing exactly the same problem with the airline industry.
We want investors to look at alternative ways of reducing carbon emissions and we want the industry to become greener and more efficient. If the Government turn their face against the amendment and against putting in the Bill a commitment that the CAA will work with the industry to reduce our carbon emissions, what signal does that send to the industry, entrepreneurs and investors who might be looking at possible ways to use their capital to run the industry more efficiently?
The Minister once spoke robustly in defence of the environment. If climate change is of compelling urgency, how can she possibly oppose the amendment without admitting that she no longer believes that to be the case? I hope that when she sums up, she will re-commit the Government to being the greenest Government ever. The simple fact is that they are not and no one disputes the fact that they are not, but they still have time to be so. She could retrieve the Government’s reputation by acknowledging the sense in my hon. Friend’s amendment and asking her hon. Friends to support it.

Pat Glass: If I may, I want to explore why the Government are removing the environmental duty. I anticipate that the Minister will tell us that the Bill is long overdue and will consolidate other areas of regulation that need to be brought together and updated, as I think we all agree. Where we differ is on removal of the environmental regulation, and I am looking for an explanation, because I simply do not understand.
We have a couple of weeks to debate and better understand the Bill, but according to my early reading of it, it is much more than simple economic regulation of the CAA. If it were only that, it would not deal with safety or extension of the ATOL system. Unless the Minister tells me otherwise, I can therefore only assume that it is not a clean and simple Bill about economic regulation with no place for a statutory duty on environmental issues, and that the relevant section has been deliberately taken out. That is the issue I want to understand, and I hope the Minister can give an explanation. I accept the point that was made earlier on this issue, and I hope that she will come forward with something better; if she does not, I do not understand why she took that section out.

Nigel Mills: May I gently remind the hon. Lady that the amendment would apply only to regulated airports, which in a couple of years might consist only of Heathrow? It would not apply to all the other airports that contribute.

Pat Glass: That may well be the case, but surely something is better than nothing.
It has been said already that the CAA would not be the only economic regulator to have a statutory environmental duty. Ofgem is an economic regulator, but it has a statutory duty to have regard to the environment, as do Ofwat and many others, so we do not seek to create a precedent.
I do not believe that anyone could argue that such a statutory duty is not needed. I appreciate that aviation emissions currently make up only 6% of UK emissions, but we all know that that is expected to rise to 25%— even if the Government stick to and meet their current targets—and removing the environmental duty does not make that situation easier. The environmental factors associated with airports and air travel go much further than emissions; they include air quality at and around airports and in the wider environment; noise pollution at and around airports; and surface transport links and access. Those issues are incredibly important not only to those who live close to airports, but to those who live further away and who have to travel long distances to the nearest airport. Those who live close to airports are naturally concerned about air quality and noise pollution, and they will be unhappy to see the Government remove the statutory duty from the Bill.
The Government may take the view that there is no need for a statutory duty and that the CAA will, of its own volition, naturally have regard to such things. Ministers may even consider self-regulation as the way forward, but I do not think people living close to airports will accept that relying on the CAA’s good nature or on self-regulation will work. They might look at what has happened recently in banking, in the press and in many other walks of life and say that self-regulation is sometimes not enough. They will not feel confident in the commitment of the Government or the CAA without the reassurance provided by a statutory duty.

Theresa Villiers: As I made clear in my evidence, I am not suggesting that self-regulation is an adequate response; I am saying that it is not appropriate to deliver the regulation needed in this area via economic regulation. Policy should be decided by Ministers and applied in a fair and even-handed way across airports, regardless of whether they are regulated for economic purposes.

Pat Glass: I thank the Minister for that, but I have already pointed out that a precedent is not being set here, and other economic regulators have a statutory duty to have regard to the environment.
Environmental issues such as surface transport links and access are important to those who live close to airports, who naturally want departing passengers to leave airports as quickly as possible without clogging up local roads. Similarly, they want arriving passengers to be moved on to their final destination as quickly as possible and in a way that causes as little inconvenience as possible to others using road and rail links.
However, we do not all live right next to airports, and we do not all live in London. Having relatively easy transport links to main hub airports is also important to those, such as myself, who live quite a long distance from local airports. Such people need to be confident that the CAA has a statutory duty to have regard to their needs, as well.
On emissions, which are of major concern to us all, we need to know that the CAA will have proper regard to the need to play its part in meeting the 2050 targets in a world in which aviation emissions will increase and the emissions challenge will get harder. Given that increasingly challenging situation, I simply do not understand why the Government have chosen to remove the statutory duty, and nor, I suspect, do many others.
I therefore have a number of questions for the Minister. Why have the Government removed the statutory duty on the CAA to have regard to environmental issues? Having done so, how do they propose to meet the increasing challenge of dealing with air quality, noise pollution, surface transport links and access for those who live close to airports and those who have to travel to and from them? What message does removing the duty from the Bill send to the industry? Finally, if the duty is not to be in the Bill, where will it be?

Julie Hilling: It is a pleasure to serve under your chairmanship, Sir Roger.
I will not speak for long, but I want to express the enormous disappointment among not only green groups, but the many people who live near airports or who are affected because of having an airport in the vicinity. There is great concern worldwide about air travel’s effect on the environment and the damage it can do to the ozone layer, but many people are more concerned about what happens day to day—about the airport’s effect on their daily lives.
Noise is the most obvious issue we talk about when we debate airports. Although it is a serious issue, it affects a smaller group of people than other environmental concerns. Similarly, the actual flight is only a small part of the carbon footprint of any journey by air. What about the environmental cost of getting people to the airport by road and rail? What about the cost of road congestion, which is a big issue in my community in Greater Manchester? What about the cost to the environment of the car-parking spaces that seem to spread across the fields, particularly around Heathrow and Gatwick, where we seem to grow cars instead of crops?
Of course, industry faces competing priorities. Its main priority has to be getting passengers to their destination in the most profitable way possible. Profits, or at least costs, are even more important for regional airports, many of which are struggling to survive. For airports it is about having as many flights as possible, and airports such as Heathrow are having to work out how to squeeze them into restricted air and ground space. It is about getting passengers to the airport in the easiest way possible, because they need to ensure that passengers choose to travel with them in future. To believe that operators will consider environmental issues out of the goodness of their hearts seems somewhat naive. My local airport does what it can to be a good neighbour, and it has invested greatly in rail links and other mitigating effects—it is now investing in Metrolink to bring in more people—but I do not believe that a vague requirement, rather than an absolute duty, is enough.
I also do not believe that passengers make any choices because of an airport’s green credentials. I am sure that, like me, other passengers work out where they want to go, what the price is and how easy it is to get to the airport. Deciding whether to fly or catch a train may be my one environmental consideration, but I do not make any further such considerations in choosing where to go.
I strongly urge the Government to include environmental duties not only for regulated airports, but for all airports. The Minister says that the Bill is not the place for environmental duties because it is about economic regulation, but it is about more than that—it is about aviation security.

Theresa Villiers: The amendments are about economic regulation. I am not saying there is nothing on the environment in the Bill—the Bill contains important provisions on environmental information. The Opposition propose introducing a supplementary environmental duty into the economic regulation of airports, which is inappropriate. As I have said, I accept there is a case for environmental regulations to address the impact of aviation, but economic regulation is not the vehicle for that.

Julie Hilling: I find that interesting, particularly as a member of the Select Committee on Transport, which has taken evidence on this issue. A major concern has been the question whether such duties should be in this Bill at all, or in a future Bill—that at some point, we will have another aviation Bill, in which we include environmental duties. Whether or not this particular clause deals with such matters, in my view environmental duties should be part of this Bill, rather than waiting for a future Bill.

Theresa Villiers: Why are communities living around Manchester airport less entitled to protection than communities living around Stansted or Gatwick? The hon. Lady is effectively arguing that there should be one rule for airports that are subject to economic regulation and another rule for those, such as Manchester, that are not.

Julie Hilling: I am disappointed with the Minister’s comments, because she clearly did not hear what I said a few moments ago, when I strongly urged the Government to include in the Bill environmental duties for all airports.
Furthermore, the Office of Rail Regulation and all sorts of other regulators have a duty to have regard to environmental concerns. It seems a bit perverse that, in considering new duties for the CAA, we are not saying it should have a duty regarding the environment. I urge that, as part of the Bill, environmental duties be established across the industry and across all airports.

Mike Freer: Will the hon. Lady explain why clause 84 is insufficient?

Julie Hilling: I am sure we can debate the insufficiencies of clause 84 when we get there.

Mike Freer: The hon. Lady talks about solving environmental issues. Clause 84 is all about environmental issues, so surely she referred to it when framing her speech.

Julie Hilling: Clause 84 is not about duties or about what the airport and the rest of the industry have to do; it is about reporting information. That is not enough. I can report information on the size of the carbon footprint involved in my getting to a particular place, but the important thing is what I am going to do about my carbon footprint, and what duty I have to reduce it. We have to say to the aviation industry that the environment is a big issue, both in terms of carbon footprint and for those who live near airports. People who live near airports are extremely disappointed that the Government have not used the Bill as an opportunity to look at the problems and do something about them.
I finish by urging the Minister to look at other ways of including in the Bill a duty on the CAA to take account of environmental issues.

Fiona O'Donnell: It is a pleasure to serve under your chairmanship again, Mr Gale. [Hon. Members: “Sir Roger!”] The last time I did so was under the re-committed Health and Social Care Bill, which I apologise for referring to earlier. Thank you for your patient and gentle approach to handling less experienced members of Bill Committees.
Although I welcome the general tone of the hon. Member for Cambridge, I encourage him to think again. Last year we had the Arab spring, and this year I think we will see the Lib Dem spring. What message will he be taking back to grass-roots Liberal Democrats about the coalition Government’s commitment to addressing climate change if he does not seize this opportunity?

Julian Huppert: I will be happy to tell the grass roots how I argued for a broader environmental duty than that proposed in the amendment, how we have introduced a Green investment bank, how the green deal will help projects through to the end of the ‘20s, and much more—but I fear that you will stop me listing all the achievements, Sir Roger. The test of the greenest Government ever is to be greener than the previous one, which is not a high threshold.

Roger Gale: Order. That is enough.

Fiona O'Donnell: Thank you, Sir Roger. I apologise for omitting your title earlier. Given the hon. Gentleman’s comments, can we look forward to his tabling some amendments to the Bill, or is history repeating itself? It is all about talking the talk, and Lib Dem coalition members are not walking the walk when it comes to living up to the environmental expectations of their own party.
I am pleased that my hon. Friends the Members for Poplar and Limehouse and for Barrow and Furness have tabled this amendment, because it allows me to talk about the opportunity to send a message about the UK’s taking a lead on climate change ahead of the Rio plus 20 summit in June. What discussions has the Minister had with the Secretary of State for Environment, Food and Rural Affairs about air quality? Earlier, the Minister accused my hon. Friend the Member for Bolton West of not caring about people who live close to other airports and concentrating only on those that would be regulated under the amendment, but we have a particular problem in London with air quality. The Secretary of State has said that there is nothing she can do, and that such a measure is too expensive. Does the amendment not provide an opportunity to address air quality, which is the second biggest public health challenge that we face after smoking? It is estimated that poor air quality contributes to approximately one in five deaths in London, so we should not walk away from the opportunity to do something about it.

Julian Huppert: The hon. Lady is right to say that there are serious problems with air quality in London and a number of other areas. Does she therefore support campaigns to tackle the problem such as “the big switch”, which Liberal Democrats in the London assembly are promoting? Will she encourage her colleagues in the London assembly to do the same?

Roger Gale: Order. She might, but not in this Committee.

Fiona O'Donnell: I am extremely grateful for that interjection, Sir Roger. I am certainly keen to work with the campaign for clean air to push the Secretary of State to work with other Departments to ensure that we improve air quality. I look forward to hearing from the hon. Member for Cambridge in other forums about exactly what the Liberal Democrats are doing to put pressure on the Government.
My contribution will be brief, and I sense a lack of enthusiasm from Government Back Benchers for a prolonged debate on the subject. However, I urge the Minister to take the opportunity to drive home the message that the UK is a global leader, and to carry on the historic work of the last Labour Government, who were the first to enshrine legal targets for climate change. I hope that she can find a way to support the amendment, so that we can improve the Bill.

Seema Malhotra: I am delighted to make what will be a very short contribution to the debate, speaking in support of amendment 11 and the statutory duty to consider the effect on the environment and local communities.
There is an age-old debate about economics and the environment that separates the two, sometimes unhelpfully. A debate could also be had on the economics of the environment and the implications and associated costs relating to environmental measures, as well as the cost of not joining up strategies that surely must be interrelated, on aviation, economics and the environment. If we do not take action and impose a duty now, as we move towards a new regulatory regime, there is a danger that, with increased demand and pressures on operators, we could well lose something that has sometimes been voluntary or a part of local agreements on noise insulation and other compensation schemes. The past, the way things have worked, and good will are not necessarily a predictor of the future. As we look at ways in which we will have to consider the work force of airports, and the ongoing impacts on them, we need to think and be clear about how we are dealing with the effects of aviation on surrounding communities.
As the Minister knows, there is increasing research to show the impact of noise on cognitive learning, local schools and sleep patterns, as well as research about the type of noise—whether sudden or gradual—and the impact that that has on levels of stress and mental well-being. I am sure that the Minister will want to do whatever is possible in this area to ensure that local communities are always looked after, as we consider the country’s economic interests.
My questions are as follows: does the Minister recognise that something is lost as a result of removing the environmental duty? If so, what does she acknowledge is lost? Where does she think we can address those issues in a joined-up way that ensures we can deliver our needs for aviation efficiently, including efficient and joined-up regulation? Does she see possibilities for that in amendments to later clauses, or, if it needs to be outside the Bill, where does she propose that we deal with the environmental impacts and effects on local communities? How will the Minister’s proposals ensure that our regulation is joined up and therefore easy to follow and implement?

Graham Stringer: Let me start with a question that I hope the Minister will answer in her summing up. The Transport Committee’s concern about an environmental obligation is not the question of whether environmental improvements could be paid for out of the regulatory asset base, but whether airports would be reluctant to put surface transport and other environmental improvements into their regulatory asset base. From previous practice over 30 years, it is clear how the CAA goes about assessing what should be in the regulatory asset base.
Under the proposed scheme, the passenger interest comes first when determining any economic regulation. Will that mean a change in the definitions of what goes into the regulatory asset base? Will it change the “retail prices index plus or minus x” formula? That is the key issue if one is looking to improve surface transport, as in Manchester. Manchester airport is contributing to a tram system, and in the end, the passenger, via the airlines, ends up paying for that. That is the key issue.
Clause 84 gives a lot of information on the subject, and in clause 1, my hon. Friend the Member for Poplar and Limehouse proposes ensuring that the information is there, so that we expose the issues. I have another reason for wishing to have more environmental information and obligations set out: it would expose some of the contradictions in the Government’s “better, not bigger” policy. The hon. Member for Cambridge spoke passionately about improving the environment. At the core of his speech—this is the core, really, of the constraints on runways, not just at Heathrow but in the south-east system—is that there should not be airport expansion. That is the Lib Dem policy. It means slowing down economic growth. Closing down access to London airports is the equivalent of switching off the internet, or cutting down internet access to other parts of the world—[Interruption.] Of course it is, because that is how business is done. If one looks at Heathrow, the absolutely key business airport in this country, one sees a steady decline in the number of destinations that it serves.

Jim Shannon: I congratulate the hon. Gentleman on making that point. It is important, in the middle of an environmental impact assessment on the effect of airports, that the other thrust is not forgotten about: the expansion of airports, and the need for aviation to drive our contact with other countries such as Brazil, China and India—three major countries. If we do not have aviation contacts, we will not have economic growth. Does the hon. Gentleman feel that we need a balance? It is clear that there has to be that balance.

Graham Stringer: My hon. Friend makes a perfectly valid point. If we take all the cities in China, there may be, to take an arbitrary figure, 12 million or even 20 million commercial connections that this city does not have. It should worry all of us that we do not have those commercial connections and that we do not make it as easy as possible for people to do business.

Julian Huppert: I will not comment on the hon. Gentleman’s point about the internet, because you will tell me off again, Sir Roger, but he is right to say that there is a difference between the predict and provide model, which means massive expansion of the carbon emissions relating to aviation, and which he seems to be supporting, and the model supported by the Committee on Climate Change, which allows for a 60% increase due to efficiencies, but enables us to keep our environmental activities progressing. He is right that there is a distinction. I am happy to support the Committee on Climate Change.

Graham Stringer: I am not, and I will explain why, on environmental and commercial grounds. I was talking about commercial grounds. On the benefits of having as much environmental information as possible, it was said earlier that people do not care where aeroplanes take off from, and in one sense they do not, but if a business person or someone going on holiday from this country, wants to go on an intercontinental journey—to India, China, Brazil or Japan—it is much easier for them now to go first to Schiphol, Charles de Gaulle, Frankfurt, Madrid and Copenhagen, where British Airways is increasingly hubbing.
The environmental consequence of the constraints on the London runway system is not globally and internationally to reduce emissions but to increase them. If planes take off and land twice, emissions are increased, as that is when most emissions take place. So the constraint on the London airport system—I suspect Government Members know and understand this and are quite worried about both the environmental and commercial implications—means that the desired improvement in the environment is prevented and the environment is actually made worse. The more environmental information we have that exposes that contradiction the better.
The hon. Member for Cambridge intervened to make a point about predict and provide. Lib Dems regularly state that there has been a predict and provide model for airports. That is absolute nonsense. There has never been a predict and provide model for airports. Only one new runway has been built in this country since the second world war. I should have said it at the beginning, although it is not a declarable interest, but I was on the board of Manchester airport for 13 years and chaired it at different times. That is the only place where there has been a new runway. The development of airports in this country has not been designed and planned by the Government. It has taken place where the airport itself could show that there was an investment case, paid for by the passengers who travel with the airlines. That happened at Manchester, Heathrow and elsewhere. That is not a predict and provide model. The Lib Dems’ use road-building capacity as an analogy, but that also has its flaws and is not a direct comparison.
My hon. Friends talked about the noise and pollution at airports. While I am in favour of improving information and making the environment better, it is worth recalling that as Heathrow, Gatwick and Manchester—the big airports in this country—have increased in size, the noise footprint has got smaller. As we have moved through chapter 1, chapter 2, and chapter 3 jets, airports have got quieter. Fewer people are affected and those who are have less noise. It is as simple as that. We want that to get better. We should like to get to chapter 10 aircraft but there is a limit because there is little that one can do about the noise that airframes make. Those are improvements and we should record them because some of the comments—not from my hon. Friends—imply that things are getting worse. They are getting considerably better and we should be proud of that as a country.
Where there are problems—Heathrow is a particular problem—it is not because of the noise levels but because of the NOx levels. How those NOx levels are measured is a complicated technical issue, but I can think of no other industry where the levels of oxides of nitrogen, which are a health problem and should be reduced, do not come directly from the industry itself. They come primarily from cars and lorries in the vicinity, not all of them going to Heathrow. One of the benefits of having a huge airport on the doorstep is the enormous amount of economic activity. Because of that success there is pollution. That should be dealt with. I have never been able to understand why the airport itself should be responsible on its own for the production of those gases. I therefore understand why my hon. Friends on the Front Bench decided to make the offer because the policy, quite simply, is hopeless. What is it? Better, not bigger.
The solution to the problems of getting people to other parts of the world is simple. Runway capacity is needed. That is an extra runway at Heathrow, Gatwick or Stansted. One does not need to go on a degree course to work that out. There is no better way than that. There is no process, as there was until the early 1990s when airlines were deregulated in Europe, to direct flights to Manchester. Forget “better, not bigger”. Either London is restricted or it is not. If access to London is restricted the UK economy is restricted. I understand why my hon. Friends offered the process of a discussion. Again, like the environmental figures, this exposes what is essentially a difficult but simple issue: how much capacity.
Like my hon. Friend the Member for Glasgow South—a distinguished former Transport Minister—I remain firmly in favour of a third runway. To do anything else is to be anti-business and growth in this country. I hope that makes it clear. I will vote with my hon. Friend the Member for Poplar and Limehouse on the environmental impacts, because there is the need for more information. However, there needs to be a more three-dimensional understanding of the costs and benefits of aviation.

Nicholas Dakin: Thank you, Sir Roger, for calling me to speak in this debate, which has been wide ranging. I hope my short contribution will remain focused on the issue. Several hon. Members have referred to the fact that the Government set out their stall to be the greenest ever. That recognises the consensus across the House on taking forward green issues. It can be a party political bunfight, but in reality it demonstrates where we have arrived consensually on greening our approach. The Minister’s commitment is well documented, as my hon. Friend the Member for Poplar and Limehouse said in his opening remarks. She has a good record on her commitment to and delivery for the environment.
All the contributions to date have underlined the importance of the environment and ensuring a commitment to it in this legislation. The pivotal issue here is whether there should be an environmental duty in the Bill. We have heard of the need for that in relation to carbon emissions, noise, environmental nuisances and air quality among other matters. My hon. Friend the Member for Blackley and Broughton outlined well the three-dimensional nature of the environment. It is not a single issue but a multiplicity.
Detailed studies of the matter—including Pilling, Cave, the original Bill and the Transport Committee report—have all consistently come out in favour of an environmental duty. Greater minds than ours have spent time on this in thorough ways and on each occasion have come out in favour of an environmental duty. I understand that the first press release by the Government contained a commitment to environmental duty. Even at that point, the commitment and consensus around the need for an environmental duty was there.
We heard evidence from Cait Hewitt of the Aviation Environment Federation. She said:
“We agree very much that all airports should be treated even-handedly in this respect, which is partly why we support a general environmental duty on the CAA that would inform all its activities across the airports at which it works.”
I recognise that the number of airports affected in the end may be constrained, but I am referring to her evidence. She went on to say:
“We are not asking for the CAA to take additional environmental measures beyond those that are required already by Government policy; we are simply asking for the appropriate legislative framework to allow the CAA to deliver Government policy at those airports at which it feels it is appropriate.”––[Official Report, Civil Aviation Public Bill Committee, 21 February 2012; c. 20, Q27.]
The extent of the environmental duty is captured in that evidence. We have heard many other views. The other witnesses before us during that session agreed with that evidence, and much written evidence has been submitted from a whole range of organisations with environmental interests, which have consistently—my hon. Friend the Member for Poplar and Limehouse has referred in detail to many of them—argued for an environmental duty in the Bill. I have picked out one submission from a Mr Chris J R Lowe, who took the trouble to write to us and who describes himself as a retired professional engineer and someone who is active with the Campaign to Protect Rural England. He underlines the importance of the Transport Committee’s conclusion that without
“giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance.”
The question that we come to at the end is, “Why not put an environmental duty on the face of the Bill?” As has been said during the debate, there is an overwhelming argument in favour of it from the various studies, and today’s arguments are also in favour. It comes back to the question of greenness and being the greenest Government ever. It is about leadership. It is about the message.

Nigel Mills: In the end, do we not come back to the fact that the amendments will apply to a small number of airports only? They will apply not to most of the issues that relate to flying, but rather to all the ground issues at an airport. On the strength of hon. Gentleman’s argument, these amendments are fundamentally flawed and should not be voted on.

Nicholas Dakin: I welcome the hon. Gentleman’s helpful intervention, which reminds us of our job on a Public Bill Committee such as this. Our job is to improve the legislation. As the hon. Member for Cambridge has reminded us, drafting amendments is not always easy without the full force of those who are good at it.

Jim Fitzpatrick: Talking of people who are not good at drafting amendments—no, let us not go there.
The Bill will allow the CAA to operate licences for airports. The CAA licenses every aerodrome in the country. There are also designated airports that operate price controls, and there are additional criteria on market dominance and power, as defined in future clauses. If the CAA were to introduce an environmental duty on airports with passenger levels above 5 million a year, that would cover 84% of air travel in the UK. That is not an insignificant number of airports and air travellers.

Nicholas Dakin: I thank my hon. Friend for his intervention, which helpfully clarifies both the point and the importance of the environmental duty.
The hon. Member for Cambridge has put down a challenge for all of us, including himself, which is that if we want the environmental duty in the Bill, as he does, as we do, and as would be consistent with this being the greenest Government ever, we need to use all our intelligence and ability to get it drafted correctly. He also laid down a challenge to the Minister to respond in a positive way to that, and if these amendments are not the appropriate way to do so—we believe the amendments give us that opportunity—the Minister may direct us to a better way, and we may be interested in working with her and her colleagues to achieve that.

Theresa Villiers: As I emphasised in my evidence on such matters to the Committee, I take seriously aviation’s environmental impact—noise, carbon, and air quality—and I am grateful for the kind words on my efforts from my hon. Friend the Member for Cambridge and the hon. Member for Scunthorpe. I am happy to reiterate the Government’s commitment to being the greenest Government ever, and I welcome the thorough and wide-ranging debate on these amendments. However, I cannot ask the Committee to support them, but I will be reflecting carefully on all the points made today. The reason why I cannot ask the Committee to support the amendments is not that I consider regulatory intervention on environmental matters to be unnecessary—there may be instances where it is appropriate—

The Chairman adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Four o’clock.